Revlon Inc (REV) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to Revlon's fourth-quarter and year ended 2011 earnings conference call. At the request of Revlon, today's conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the call over to Ms. Elise Garofalo, Revlon's Senior Vice President, Treasurer, and Investor Relations. You may begin, Ms. Garofalo.

Thank you, Nancy. Good afternoon, everyone, and thanks for joining today's call. Today we released our results for the year and the fourth quarter ended December 31, 2011. If you have not already received a copy of the earnings release you can obtain one on our website at revloninc.com.

On the call with me this afternoon are Alan Ennis, Revlon's President and Chief Executive Officer; Chris Elshaw, Chief Operating Officer; and Steven Berns, Chief Financial Officer.

Before I turn the call over to Alan I would like to remind everyone of a few things. First, our discussion this afternoon might include forward-looking statements which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act. Information on factors that could affect the Company's results from time to time and cause them to differ materially from such forward-looking statements is set forth in the Company's filings with the SEC, including our 2011 Form 10-K which was filed today.

Next, our remarks today will include a discussion of the following non-GAAP measures -- adjusted EBITDA, free cash flow, and the provision for income taxes excluding the non-cash tax benefits discussed in our earnings release. These non-GAAP measures are defined in the footnotes to our release and are also reconciled to their most directly comparable GAAP measure in the financial tables at the end of our release.

And finally, as a reminder, our discussion this afternoon should not be copied or recorded. With that, I will turn the call over to Alan.

Thank you, Elise, and good afternoon, everyone. The execution of our business strategy in 2011 has enabled us to achieve significant progress. Guided by our strategic goal of profitably growing our business, we are focused on executing our business strategy. Specifically, to build our strong brands; develop our organizational capability; drive our Company to act globally; increase our operating profit and cash flow; and improve our capital structure. So let me discuss some of the notable achievements in 2011 under each element of our business strategy.

First, building our strong brands. From a top-line perspective we grew net sales in 2011 by 4.5% in the face of continued uncertain economic conditions. We placed continued emphasis on innovation, effective brand communication, and strong in-store execution.

From a marketplace perspective we introduced a number of innovative, high-quality consumer-preferred products across our entire portfolio, including Revlon ColorBurst lip gloss, Revlon Top Speed nail color and Almay Intense i-Color smoky-i kits. We also added the Sinful Colors brand to our portfolio, which has performed very well in the marketplace.

In addition, we signed two of Hollywood's most sought-after actresses, Emma Stone and Olivia Wilde, as Global Brand Ambassadors for our Revlon brand, both of whom we believe will help us to continue to build meaningful connections with consumers.

The next element of our business strategy is to develop our organizational capability. We significantly strengthened the capabilities of our leadership team this year through a number of key appointments.

Xavier Garijo joined us as Chief Supply Chain Officer and brings broad experience in the consumer products space, having served in key leadership roles at top consumer products companies. Xavier replaces Art Franson, who retired in 2011. Through Xavier's leadership, we are focused on more effectively globalizing our supply chain.

Lauren Goldberg joined us as General Counsel, bringing over 20 years of broad legal experience to our team. Lauren has assumed the role from Bob Kretzman, who very capably led the legal function for over a decade. Bob remains in the role of Chief Administrative Officer and continues to be a key member of our leadership team.

Also this year we strengthened our marketing organization and our processes under the leadership of our Chief Marketing Officer, Julia Goldin, who has just completed her first full year with us. Julia was recently recognized as a Newcomer of the Year by Women's Wear Daily, a formal honor in the marketplace, and recognizing the accomplishments that we have delivered with our brands.

These individuals complement a highly capable team which is focused on achieving our strategic objective of profitably growing our business.

The third element of our business strategy is to continue to drive our Company to act globally. This guides how we think, plan, and act across all of our brands and regions. We are leveraging our brand positioning, our portfolio planning process, and our brand communication plans on a global basis.

We are also focused on improving our operating efficiency through many activities including global supply chain management, which again delivered improved inventory turns in 2011.

The last two elements of our strategy are to increase operating profit and cash flow and to improve our capital structure. In 2011 we increased profitability, achieving adjusted EBITDA of $266 million and operating income of $203 million. We sustained highly competitive operating income and EBITDA margins. We achieved our fourth consecutive year of positive free cash flow, and we improved our capital structure by refinancing our credit agreements, which lowered our cost of borrowing and extended maturities. Additionally, in April 2011 our credit rating was upgraded by Moody's.

So with that, let me hand it over to Chris, who will take you through our marketplace performance.

Thank you, Alan. Good afternoon, everyone. Today I will review our net sales performance excluding the impact of changes in foreign currencies, by region and by brand. Total Company net sales in 2011 were approximately $1.4 billion, an increase of 3.3% versus 2010. This increase was primarily driven by the inclusion of the net sales of Sinful Colors and higher net sales of Revlon and Almay color cosmetics as well as Revlon ColorSilk haircolor.

These increases were partially offset by lower net sales of Revlon beauty tools and lower net sales in Venezuela due to the June 2011 fire which destroyed our facility there.

From a regional standpoint, in the United States net sales increased $28.3 million or 3.9%, primarily due to the inclusion of the net sales of Sinful Colors plus higher net sales of Almay color cosmetics and Revlon ColorSilk haircolor. These increases were partially offset by lower net sales of Revlon beauty tools and Revlon color cosmetics. Net sales in the US region grew in 2011 excluding the results of Sinful Colors.

Let me take a moment to address the fourth-quarter net sales performance in the US. In the US, net sales decreased in the fourth quarter by $9.4 million or 4.7%, driven primarily by lower net sales of Revlon color cosmetics, which were partially offset by higher net sales of Almay color cosmetics and Revlon ColorSilk haircolor plus the inclusion of Sinful Colors.

Higher returns expense and higher promotional allowances resulted in lower net sales of Revlon color cosmetics. Both returns and promotional allowances are accounted for as reductions in arriving at net sales.

Higher returns were primarily driven by two factors. First, we are cycling the low returns expense noted in our 2010 fourth-quarter results.

Second, we had higher returns expense in the quarter due to a higher number of product discontinuations as compared to the same period last year. This increase in discontinuations was driven by the breadth and the scope of our 2012 new product introductions.

With respect to the higher allowances in the fourth quarter of 2011, promotional allowances formed a greater part of our brand support mix as compared to the same period last year. We monitor and refine the balance between advertising and promotion on an ongoing basis in order to ensure we are supporting our brands with appropriate levels and mix of brand support.

As a reminder, in addition to returns and allowances there are a number of other factors that can affect net sales from quarter-to-quarter including new product introductions, advertising, promotional activity, competitive environment, consumer behaviors, and retailer strategies. So as we often note, it is better to review our performance over time.

Further, with respect to the US, on a full-year basis, returns expense was not a driver, positively nor negatively, of our net sales performance year over year.

Now let me return to our discussion of full-year 2011 results outside of the US. In Asia-Pacific, net sales increased $8.4 million or 4% primarily due to higher net sales of Revlon color cosmetics in China and certain distributor markets, partially offset by lower net sales of Revlon color cosmetics in Australia and Japan. Economic uncertainty negatively impacted the retail market place in Australia and Japan this year, although we continue to see growth in both China and certain distributor markets.

Moving on to Europe, Middle East, and Africa, net sales increased $4 million or 2%, primarily due to higher net sales of Revlon color cosmetics in South Africa and certain distributor markets, partially offset by lower net sales in Italy.

In Latin America, net sales increased $4.6 million or 4.3%. This increase was primarily due to higher net sales of Revlon color cosmetics throughout the region and higher net sales of other beauty care products in Argentina. These increases were partially offset by lower net sales in Venezuela where the Company had not fully resumed business since the June 2011 fire.

In Canada, net sales decreased $2.3 million or 3.1%, primarily due to lower net sales of Almay color cosmetics. Our highly capable Canadian leadership team is focused on improving our business in the region, including refining our brand support mix and optimizing in-store execution across all of our customers.

Now, moving on to our performance by brand, starting with Revlon color cosmetics, total Company net sales increased as compared to the prior year. 2011 benefited from a number of new product introductions and positive performance of our successful PhotoReady, ColorBurst, and nail color franchises. We continue to innovate and have recently introduced a number of new products which are supported by a new advertising campaign.

In the face segment, we extended the Revlon PhotoReady franchise with the addition of PhotoReady airbrush mousse makeup which goes on light as air and contains innovative photochromatic pigments that bend and reflect light to give a flawless, airbrushed appearance.

In the eye segment, we introduced PhotoReady 3D Volume Mascara, a revolutionary volumizing mascara with a unique reflecting formula that makes lashes look 100% more magnified and multiplied. These new Revlon PhotoReady offerings are early in their launch, and we look forward to continued positive performance from this franchise.

Continuing in the eye segment, Revlon ColorStay has been a leading brand in our core eye shadow offering over the years. Building upon its success we restaged and upgraded our Revlon ColorStay eye shadow quads with 16-hour wear and new premium design and packaging. This new shadow offers impactful, long-wearing color in both the hottest runway-inspired and classic shades. This restaging is consistent with our approach of not just expanding our product range but also strengthening our existing products with new technology.

In the lip segment, extending our Revlon ColorBurst franchise, we introduced Revlon ColorBurst Lip Butter, a buttery balm that instantly hydrates lips while providing color with a high shine finish. Studies show that 94% of women who used this product felt lips were softer, smoother, and instantly hydrated. To date, our ColorBurst Lip Butter has been very well received in the marketplace.

The ColorBurst franchise is fairly new, only just created in 2009. And we are very proud to have built a strong franchise with new product successes and innovation over the past few years, including ColorBurst lipstick, and ColorBurst lip gloss.

Lastly, in the nail segment, we introduced ColorStay longwear nail color containing our exclusive ColorStay light curing technology which cures in natural light versus a salon UV light, providing a gel-like shine and 11 days of high-impact color.

Also worthy of note, Revlon TopSpeed nail color, our advanced fast-drying line of nail color that sets in 60 seconds, was one of the leading new nail products in the US marketplace in 2011. Across all of our nail franchises we continue to expand our products portfolio and provide a fashion-forward, on-trend shade offering.

As we focus on building our strong brands we are very pleased with our ability to reinvigorate core franchises like ColorStay and Revlon nail color as well as introduce and successfully establish new franchises like Revlon ColorBurst and Revlon PhotoReady.

Moving on to the Almay brand, net sales of Almay increased year-over-year. Our Intense i-Color franchise benefited from the introduction of Intense i-Color smoky-i kit in 2011 which delivered very strong performance. Building upon the formula and packaging innovations behind smoky-i, we have extended the franchise with the introduction of Intense i-Color satin-i and shimmer-i kits. These new products help consumers create their desired eye look with ease.

We have also introduced Almay Intense i-Color shadow stick, the first non-creasing dual-ended shadow stick from Almay, containing highly saturated pigments for vibrant, rich color in expertly coordinated shades.

In the face segment, under our SmartShade franchise, we introduced Almay's first primer called Smart Shade Perfect & Correct, which instantly brightens and color-corrects skin, defusing imperfections and leaving skin softer, smoother, and up to 2.5 times more hydrated.

In women's haircolor, net sales of Revlon ColorSilk increased year-over-year. During 2011, we expanded distribution of ColorSilk, including ColorSilk Luminista, in a number of markets outside the US. Building on this success we have introduced Root Erase by ColorSilk, which erases roots and grays with ease for beautiful, seamless color in 10 minutes. This product features our unique ColorSilk Precise Control sponge applicator ensuring a precise, mess-free application.

In antiperspirant deodorants, net sales of Mitchum increased year-over-year behind the launch of Mitchum Advanced Control. And our Revlon beauty tools business continues to perform well even in the face of softer demand in the category overall. Revlon beauty tools is the number-one brand in the US and Canada.

Finally, I would like to note that we were very active in the fall/winter 2012 Fashion Week in New York over the past week and have similar plans for London. Our participation in these activities highlights that our new products are not only on trend but that we establish and set the trends.

Now, I'll turn it over to Steven to walk you through the rest of our financial results.

Thank you, Chris. As we have already discussed our net sales performance, I'll begin with gross margin performance for the year.

Our gross margin in 2011 was 64.3% versus 65.5% in 2010. Gross profit in 2011 was unfavorably impacted by product mix and higher promotional allowances, partially offset by the favorable impact of foreign currency fluctuations and lower pension expense within cost of sales.

SG&A increased $18.9 million in 2011 to $685.5 million, due to higher general and administrative expenses and the unfavorable impact of foreign currency fluctuations. These higher expenses were partially offset by the benefit of business interruption insurance recoveries associated with the fire that destroyed our Venezuela facility. These recoveries essentially made us financially whole for both costs incurred and estimated lost profits through December 2011.

Operating income for 2011 was $203.3 million compared to $199.8 million; and adjusted EBITDA was $266 million compared to $260.4 million for 2010. Interest expense decreased $5.6 million to $91.3 million this year, primarily due to the May 2011 refinancing of our term loan credit facility at lower interest rates.

Income from continuing operations before income taxes was $89.6 million as compared to $79.8 million in 2010.

The provision for income taxes was an expense of $36.8 million in 2011. There were two components to this year's tax provision.

First, income tax expense of $53.7 million and second, a non-cash tax benefit of $16.9 million. The non-cash tax benefit is a result of the reduction in our deferred tax asset valuation allowance in certain markets outside the United States. As a reminder, last year we had a reduction in the deferred tax valuation allowance in the United States of $260.6 million, which benefited our reported provision for taxes in 2010.

It is important to note that these reductions in our deferred tax asset valuation allowances have no impact on the Company's cash taxes paid, cash flow, or its liquidity. In 2011, cash paid for income taxes was $20.5 million as compared to $16.2 million in 2010.

Net income for 2011 was $53.4 million or $1.02 per diluted share, compared to net income of $327.3 million or $6.26 per diluted share for 2010. Operating income, income from continuing operations before tax and net income, included pretax charges of $11.2 million in 2011 associated with the refinancing of the Company's credit facilities. In 2010 the same P&L line items included pretax charges of $9.7 million associated with the March 2010 refinancing.

Moving on to cash flows, net cash provided by operating activities for 2011 was $88 million compared to $97.2 million. Free cash flow was $74.4 million compared to $82.3 million.

Cash flow in 2011 included higher cash paid for permanent cabinetry, interest, and pension contributions as compared to 2010. Favorable changes in other working capital partially offset these higher cash uses.

Now, let me take a moment to update you on our situation in Venezuela. As we have previously stated, our facility in Venezuela was destroyed by a fire in June 2011. Our subsidiary in Venezuela represented approximately 2% of the Company's consolidated net sales in 2011 and 3% in 2010.

As of December 31, 2011, Revlon Venezuela had not fully resumed business following the June 2011 fire. Prior to the fire approximately half of the net sales in Venezuela were sourced from our local production facility and the other half was imported from our US manufacturing facility. In August of 2011, we resumed shipments to Venezuelan customers of product imported from our US facility.

Actions to address the sourcing of products previously manufactured locally remain under review at this time. Additional details of the financial impact of the Venezuela fire and its impact on our business are included in today's earnings release and the Company's Form 10-K for 2011.

Moving to the P&L for the fourth quarter of 2011, my commentary on net sales will exclude the impact of changes in foreign currencies. Net sales in the fourth quarter of 2011 were $359.8 million, essentially unchanged year-over-year.

In the United States, net sales decreased $9.4 million or 4.7% as Chris discussed earlier in this call. In Asia-Pacific, net sales increased $1.4 million or 2.3% driven by higher net sales of Revlon color cosmetics in China and certain distributor markets, partially offset by lower net sales in Australia.

In Europe, Middle East, and Africa, net sales increased $4 million or 7.1%, primarily due to higher net sales of Revlon color cosmetics in South Africa and certain distributor markets.

Next, in Latin America, net sales increased $1.5 million or 5%. This increase was primarily due to higher net sales of Revlon and Almay color cosmetics and Revlon ColorSilk haircolor throughout the region, as well as higher net sales of other beauty care products in Argentina. These increases were partially offset by lower net sales in Venezuela where, as I previously stated, the Company had not yet fully resumed business since the June 2011 fire.

Lastly, in Canada, net sales decreased $400,000 or 1.9%, primarily due to lower net sales of beauty tools and other beauty care products, partially offset by higher net sales of Almay color cosmetics.

Moving on to operating income for the fourth quarter, operating income was $66 million compared to $67.8 million; and adjusted EBITDA was $81.7 million compared to $83.3 million in the same period last year. Operating income and adjusted EBITDA in the fourth quarter of 2011 were negatively impacted by lower gross profit, partially offset by lower SG&A. SG&A expenses decreased versus the prior year primarily due to lower advertising expenses and the benefit of business interruption insurance recoveries related to the fire in Venezuela.

Interest expense decreased $2.9 million to $21.8 million in the fourth quarter of 2011. The provision for income taxes was an expense of $4.4 million in the fourth quarter of 2011 as compared to a benefit of $256.4 million in the same period last year. Excluding the non-cash tax benefits discussed earlier of $16.9 million in 2011 and $260.6 million in 2010, the provision for income taxes in the fourth quarter of 2011 was an expense of $21.3 million as compared to an expense of $4.2 million in 2010.

Net income in the fourth quarter of 2011 was $36.4 million or $0.70 per diluted share, compared to $296.2 million or $5.66 per diluted share in the same period last year.

Turning now to cash flow, operating cash flow in the fourth quarter of 2011 was $67.8 million compared to $47.2 million, and free cash flow was $63.6 million compared to $43.5 million in the same period last year. Favorable changes in working capital were partially offset by higher permanent cabinetry spending as compared to the fourth quarter of 2010.

On the liquidity front, our unutilized borrowing capacity and cash on hand as of December 31, 2011, was $228 million, comprised of $100.7 million of available cash and $127.3 million available under our revolving credit facility. Our revolving credit facility was undrawn at year end, and we had $11.1 million of standby letters of credit issued under this facility.

Moving on to 2012, let me update you on several factors that we expect to impact our 2012 financial performance. Consistent with our historical practice I will provide you with our expectations regarding certain 2012 cash flow information.

Capital expenditures are expected to be approximately $25 million. Permanent display expenditures are expected to be approximately $40 million. Pension plan contributions are expected to be approximately $35 million. Cash interest expense can be estimated by reference to our public filings, which detail the composition of our capital structure as well as the applicable interest rates. And lastly, cash paid for income taxes is expected to be approximately $20 million.

This concludes our prepared remarks, and we would now like to open up the call for questions. Operator, please prompt the participants for questions.

(Operator Instructions) Carla Casella, JPMorgan.

Hi, I had two questions. One is, could you just talk about the European environment? If you see any stabilization or still weakness, weakening in some -- in which countries there.

Hi, Carla. It's Chris. So, in Europe, as you know, we have some major markets as far as in UK and South Africa, and then we have a number of distributor markets. So I mean all that we see through those markets is what you will see reading the press day in, day out. There is no special category for cosmetics there that is doing particularly differently.

We are not highly exposed to some of the markets which are having the most difficult times. Meanwhile, we do see some slower growth in some places. But you know, we're very focused on executing our plan.

Okay, great. Then just from the capital structure standpoint, your bonds are callable next year; I guess what is your view in terms of optimal capital structure? Do you see -- are you -- do you view these as expenses that you would want to take out at the first opportunity? Or how are you looking about that? Are you thinking about the refinancing next year or leaving them outstanding?

Carla, it's Steven Berns. We look at our capital structure all the time and make sure that we are able to have the right capital structure to execute the business strategy. So consistent with Alan's comments earlier in his opening remarks and as we have said in the past, part of our strategy is to have a capital structure which enables the operations to perform. So there is no -- we don't have a special look at any particular instrument. We are aware of the features and the provisions of each, and we monitor them.

Okay, great. Thank you.

David Wu, Telsey Advisory Group.

Hi, good afternoon, everyone. First, in the US, any trends you could call out perhaps between sellout rates across your channels, whether mass retailers or drugstores?

Hi, David. It's Chris. We haven't seen any change in the last course of the trends that we have seen throughout the year. The cosmetics category in the US continues to be showing reasonable growth; that continued in the fourth quarter, although it started to slow down slightly towards the end. But as ever, competition remains intense in that category not only between ourselves and our competitors, but between our customers.

Would you say the environment in the US as well as in Europe got more promotional? And what are your expectations for 2012?

The environment has always been intensely promotional in the US. I don't see in the last quarter any sign of that changing. I don't know how that would change in the short term.

I think what you see, David, just to build upon that, is over time both retailers and manufacturers optimizing their mix of brand support between advertising and promotional spending, depending on what they see in the marketplace. So quarter-to-quarter, those events will fluctuate, but the basis of competition hasn't really changed.

Great. In terms of ad spending, could you quantify at all how much the ad spending did decline in the quarter? And maybe perhaps talk about how you are planning for FY '12.

So in terms of ad spend we don't talk specifically on a quarterly basis. What I will tell you is we spent what we believed to be at a competitive level in 2011 across the entire portfolio and across the entire suite of opportunities to spend. And I will tell you that we will continue to do the same in 2012.

Great. Thank you very much.

Connie Maneaty, BMO Capital.

Hi, it seems -- I think you said in your prepared remarks that part of the reason US sales were down from -- part of the reason that there was a high level of returns and allowances was to clear the way for the new product introductions for 2012. But everything you mentioned I think has already been put on store shelves. So what exactly were you referencing with that comment?

So, Connie, as you know, in the US marketplace the new products for the following year are shipped in the fourth quarter, and hence the returns are associated with those shipments. Now, in amongst those shipments there were two groups really. One was our normal ribbon of innovation, which you know is significant in this category. The second thing is we also restaged some core products, which are ongoing core products which you wouldn't normally be shipping as a new product, as a hard launch in that period. But because there were restages, on Revlon ColorStay quads for example and Revlon core nail, hence they attracted returns because of that.

Okay. On an annual basis, since we don't have the actual sales dollars for Sinful Colors, so we have estimated; but it looks to us that on an annual basis US sales organically declined about 2.5% in 2010 and maybe 1.5% in 2011. So if you --

As I mentioned in my remarks, Connie, net sales in the US region in 2011 grew excluding the results of Sinful Colors.

Oh, excluding Sinful Colors? Okay. Okay. So -- then on an organic basis, you think the US business has turned a corner such that you're on a path now to annual sales growth?

Well, Connie, we never as you know, give guidance and neither do we say that one quarter establishes a trend. As always, we are focused on the same drivers of success. We are focused on that product portfolio, having the appropriate advertising and promotion support, and executing well in store. And we continue to be focused on those things.

Okay. How should we -- I know you don't talk anymore about your market share data. But the market share data for the last quarter in face and eye makeup show declines of about 140 basis points. Why shouldn't we factor that into what the US sales decline was? Why shouldn't that be a consideration?

Well as you know, Connie, one of the reasons we stopped talking about the market share data was it's partial market share data. It doesn't cover Wal-Mart, who is everybody's biggest customer in the mass market business, so that was why we stopped talking about it.

In terms of the category and what happened, one thing which I think you will have seen is that the nail category, the nail segment exploded. And that did change the shape of the overall category in 2011.

Okay. In Venezuela, how long do the insurance proceeds continue?

The insurance proceeds, Connie, they continue into 2012. But at this point in time we are just in discussions with our insurer. And as we said the 10-K has all the detail about its impact on '11; but we haven't predicted what the impact will be on '12.

Are you subject to any of the price caps in Venezuela that the government is trying to impose?

Color cosmetics isn't on that list as its stands today, Connie. Deodorants are, but that is not a material impact for us.

Okay. One last thing. Why is CapEx going from $14 million this year to $25 million next year?

Connie, it's Alan. Hi, a couple things. One of the things that we are focused on is driving efficiencies in some of the processes that are pretty manually intensive today. As I mentioned in my prepared remarks we brought a new Chief Supply Chain Officer on board toward the back half of 2011, and I have had some very in-depth discussions with him about where we can deploy some additional capital to automate certain processes that are manually intensive today. So the capital investment is really designed to get ferret out those efficiencies and create a better cost profile going forward.

Did you spend in 2011 up to what you had budgeted in CapEx?

No. We had a plan to spend about $20 million and we spent about $15 million.

Okay, good. Does that just mean that some projects were delayed into 2012?

Well, there is a variety of things. Some projects that you plan to execute don't happen for a variety of reasons. There was no real overt action that we took to influence that. But certainly some of those projects that were approved will happen in '12.

Okay. That's all I have. Thanks.

It appears there are no further questions at this time. Mr. Ennis, I would like to turn the conference back to you for any additional or closing remarks.

Thank you, Nancy, and thank you all for joining our conference call. As I mentioned and as you have heard, we are strengthening our brands, we are investing in our people, and we are improving our financial profile. Our focus in 2012 will be to build upon the solid foundation and competitive margin structure that we have established.

Importantly, I would like to express my sincere appreciation to all of our employees around the world for our many accomplishments in 2011. And I look forward to speaking to you all when we report our first-quarter 2012 results. Thank you.

That concludes today's presentation. Thank you for your participation.